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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
CHINA
- In the past 15 months, even though the policy rate differential between China (Required Reserved Ratio) and the US (Fed Funds Rate) has remained steady, CNY has been constantly strengthening against the US Dollar, from nearly 7.2 to 6.45 (+11.6% appreciation for the CNY).
- One of the major factors behind the USD weakness has been the sharp increase in the Fed's balance sheet (doubling from 4 to 8tr USD) relative to the rest of the central banks (PBoC balance sheet assets are almost flat during that same period).
- However, the recent deceleration in Chinese economic activity has weighed on domestic asset prices in recent months, tightening financial conditions (i.e. cheaper equities and stronger CNY).
- As a result, Chinese officials decided to cut the RRR (to major banks) by 50bps to 12% in order to stimulate both asset prices and the economic activity.
- Will lower rates in China be enough to weaken the CNY in the near to medium term?
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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